Choice involves an awareness of alternatives. Commitment does not necessarily do so. Choice should change when relevant circumstances change. Commitment should not. In Indian thought, there is a difference between 'vrat'- a vow, or commitment- and 'vikalpa' which means 'alternative' and is classed as a 'yukti' (technical division) in the Arthashastra. Both, however, are subordinate to dharma which is duty when it can't be pure piety.
A 'vrat', or commitment, may appear like a constraint, but the Mahabharata shows that piety must reserve judgment in this matter because unlike 'vikalpa', vrats are multiply realizable whatever the facts of the case. One consequence of this understanding was that the notion of 'prescriptivity'- as in Kant- couldn't arise. Indeed, the notion is foolish. It is true that, speaking generally, I should treat my Doctor's advise as 'prescriptive'- i.e. I should act on its basis- but the fact is I oughtn't to be seeing a Doctor at all because I suffer no congenital defect ; rather, my physical health is poor because I eat too much and take little exercise. Thus, to say something is prescriptive is to speak ad captum vulgi because we know there are different, sometimes superior, ways to achieve the same object by relying more on oneself.
Kant spoke of a categorical imperative. This gives rise to the notion that everybody with the same commitment must do exactly the same thing- though it may take a great logical genius to work out what this is. This is a very silly notion. The work 'kategoros' came in to philosophy from the courts. But going to Court is a last resort. Socrates says that the use of categories is like using the oars to propel a boat when there is not enough wind to fill the sails. In other words, there are many many different ways of fulfilling exactly the same commitment. Only if things get really fraught- the matter goes to court, so to speak- only then might we have to agree that the commitment means one thing only so as to avoid greater chaos.
Common sense, at least as we get older, tells us that intuitions which can't be exactly expressed, or solutions to coordination problems which are not computable, promote better correlated equilibriums. There is, in the words of the words of the Bible, a mysterious economy or Divine management such that everyone doing their duty, or paying a pious regard to the 'inner voice', enables a better outcome than any which could be specified or imposed from on high. The Katechon ('that which restrains') is what keeps the Eschaton- the Day of Wrath- at bay. But the kathekon- duty, which is a sort of restraint- is one's natural function, for Stoicism, and though it falls short of the perfect actions of the omniscient Sage, nevertheless this is sufficient for the Divine Economy. I suppose, this is also the message of Lord Krishna.
There was a time when the Universities provided an elite paideia which inculcated, that too, in a Classical language, the garnered wisdom of maturity. It could be considered a sort of handicap for the well-born or scions of the wealthy which weighed down on them during their initial ascent of the Cursus Honorum- the path of holding public offices of higher and higher importance- but it eventually lightened their burden by casting in lapidary form such wisdom and maturity as they themselves acquired over the course of their career. Straussians may speak of this paideia as involving a noble lie. The truth is that nobility is a lie. Only work ennobles. Vulgarly put, you may fake it till you make it- but only if you are actually putting in the work. The Lie is that there is a shortcut- something 'categorical' or 'prescriptive' or 'synthetic a priori'- whereas, in truth, there can only be Dumbo's magic feather that too only if a long enough eared elephant really could fly. Still, at the end of work, for the vast mass of the more heavily burdened, there is indeed some magic which gives the soul wings.
Sadly, after the War, an increasing number of useless or senile academics took up ad captum vulgi 'truths' and tried to found some sort of axiomatic system upon them. They made fools of themselves and rendered non-STEM subjects either useless or subject to punitively diminishing returns.
As a case in point, back in 1971, Amartya Sen- who remains blissfully ignorant of Indian thought though boasting of having learnt Sanskrit- wrote-
Rational choice is the sort of choice which involves reasoning or which itself can be reasoned about. Economic rational choice focuses on opportunity cost- the next best alternative foregone- but opportunity cost is a global concept. It isn't always apparent what it actually is because we don't generally know all possible states of the world or what probability is associated with each. Sadly, this means there is no algorithm which captures rational choice. Reality is simply too uncertain. We can say things like 'I want to make the best choices' or 'I want to make choices I will regret least' or 'I want to choose in my own way regardless of what others think- because that's what matters to me' or 'I want to do what JC would' etc., etc. Still, it would be foolish to get too hung up about such rules we might want to give ourselves. On the other hand, we may get a job where we are contractually obliged to choose in a particular way. Alternatively, we may want to find a good enough rule for choosing for an employee or dependent. These are situations where conversations about rational choice are bound to crop up.
What is foolish is to complain that we have to make rational choices because money and time are scarce. Postponing action endlessly, while talking incessantly of one's commitment is the despicable stock in trade of the gesture politician or virtue signaling pedant who wastes everybody's time. Still, histrionic hypocrisy of this sort can be very addictive.
Sen in his paper 'Rational Fools' begins thus-
In his Mathematical Psychics, published in 1881, Edgeworth asserted that "the first principle of Economics is that every agent is actuated only by self-interest."'
So, Economics is about one type of behavior. Religion is about another type of behavior as is Law and Psychology and so forth.
This view of man has been a persistent one in economic models, and the nature of economic theory seems to have been much influenced by this basic premise. In this essay I would like to examine some of the problems that have arisen from this conception of human beings.
No problems arise by Chemistry being about chemicals. Why should some problem arise because Economics is not Religion or Law or Psychology?
I should mention that Edgeworth himself was quite aware that this so-called first principle of Economics was not a particularly realistic one.
It was realistic for Economic behavior. It wasn't realistic for Religious or Affectionate or or Ceremonial behavior.
Indeed, he felt that "the concrete nineteenth century man is for the most part an impure egoist, a mixed utilitarian."
So there was no problem for nineteenth century. Why did late twentieth century man turn into such a snowflake that he needs some more cuddly and sweet type of economics?
This raises the interesting question as to why Edgeworth spent so much of his time and talent in developing a line of inquiry the first principle of which he believed to be false.
It isn't false. Some of our behavior is economic. Some isn't. We can use econ to improve economic behavior and use some other discipline to improve other sorts of behavior.
The issue is not why abstractions should be employed in pursuing general economic questions-the nature of the inquiry makes this inevitable-but why would one choose an assumption which he himself believed to be not merely inaccurate in detail but fundamentally mistaken?
It wasn't mistaken. Behavior can be factorized and the economic component of behavior can be analyzed and improved through tools like the Edgeworth box. Meanwhile, Medicine can improve behavior by making people healthier.
As we shall see, this question is of continuing interest to modem economics as well.
Not really. Economists get paid to find ways to do things more economically. They aren't called upon for psychological counselling or moral admonition or spiritual sermons.
Part of the answer, as far as Edgeworth was concerned, undoubtedly lay in the fact that he did not think the assumption to be fundamentally mistaken in the particular types of activities to which he applied what he called "Ceconomical calculus": (i) war and (ii) contract. "Admitting that there exists in the higher parts of human nature a tendency towards and feeling after utilitarian institutions," he asked the rhetorical question: "could we seriously suppose that these moral considerations were relevant to war and trade; could eradicate the controlless core of human selfishness, or exercise an appreciable force in comparison with the impulse of self-interest."
The answer continues to be 'no'. On the other hand, there will always be a certain amount of virtue signaling and a pretense of philanthropy.
He interpreted Sidgwick to have dispelled the "illusion" that "the interest of all is the interest of each," noting that Sidgwick found the "two supreme principles-Egoism and Utilitarianism" to be "irreconcilable, unless indeed by religion."
What did for Benthamite Utilitarianism was Darwin which is what also shook up Victorian certitudes.
"It is far from the spirit of the philosophy of pleasure to deprecate the importance of religion," wrote Edgeworth, "but in the present inquiry, and dealing with the lower elements of human nature, we should have to seek a more obvious transition, a more earthy passage, from the principle of self-interest to the principle, or at least the practice, of utilitarianism."
This is done by showing that enlightened self-interest would militate for public signals which promote better correlated equilibria. We may want to shit in the street but can see that if nobody shits in the street everybody would be better off. So a public signal to that effect may be accepted though we remain egoists and would prefer to be able to shit in the street provided nobody else did so.
Notice that the context of the debate is important to this argument. Edgeworth felt that he had established the acceptability of "egoism" as the fundamental behavioral assumption for his particular inquiry by demolishing the acceptability of "utilitarianism" as a description of actual behavior.
This simply isn't true. Edgeworth says 'it isn't true that the 'interest of all' is the 'interest of each'. Eugenics may be in the interest of all but ugly peeps may still want to marry and have ugly kids. Darwin explains why this is cool. That which is not adaptive will get weeded out anyway. Sidgwick wasn't saying this- he dismissed Darwin as irrelevant to ethics. The alternative was to become a eugenicist- which was even more repugnant. Sidgwick squared that circle by taking an interest in parapsychology. His wife, a scientist, came to believe she had found proof of life after death.
Utilitarianism is, of course, far from being the only non-egoistic approach.
It is wholly egoistic- otherwise its adherents would either top themselves or go around giving beejays to hobos.
Furthermore, between the claims of oneself and the claims of all lie
nothing at all. You can always claim to be claiming for everybody. Why won't everybody just do what you tell them? It is because other people are very evil.
the claims of a variety of groups- for example, families, friends, local communities, peer groups, and economic and social classes.
who are part of the 'all' and who, thus, should do what you tell them.
The concepts of family responsibility, business ethics, class consciousness, and so on, relate to these intermediate areas of concern, and the dismissal of utilitarianism as a descriptive theory of behavior does not leave us with egoism as the only alternative.
It leaves us with nothing at all if Darwin was right. Clearly utilitarianism is about the greatest good of those who will be the progenitors of all sooner rather than later. Their egotism alone is justified. Everybody else should just fuck off and die if they can't make themselves useful.
The relevance of some of these considerations to the economics of negotiations and contracts would be difficult to deny.
They have no relevance whatsoever. When negotiating, if the other party says 'what about the environment?', you reply 'pay double and I'll arrange for the environment's rape counselling'.
It must be noted that Edgeworth's query about the outcome of economic contact between purely self-seeking individuals had the merit of being immediately relevant to an abstract enquiry that had gone on for more than a hundred years already, and which was much discussed in debates involving Herbert Spencer, Henry Sidgwick, and other leading thinkers of the period.
Edgeworth was very very clever but his book was difficult to read. But his statistical and analytical work was useful.
Two years before Edgeworth's Mathematical Psychics appeared, Herbert Spencer had published his elaborate analysis of the relation between egoism and altruism in The Data of Ethics. He had arrived at the comforting-if somewhat unclear -conclusion that "general happiness is to be achieved mainly through the adequate pursuit of their own happinesses by individuals; while, reciprocally, the happiness of individuals are to be achieved in part by their pursuit of the general happiness."
Which is still clearer than any shite Sen has written. The reason the Indian revolutionaries took up Spencer- whom they rechristened 'Harbhat Pendse' was because paternalism was choking the life out of India. Sen's Capability approach would be more of that nuisance.
In the context of this relatively abstract enquiry, Edgeworth's tight economic analysis, based on a well-defined model of contracts between two self-seeking individuals, or between two types of (identical) self-seeking individuals, gave a clear answer to an old hypothetical question. It appeared that in Edgeworth's model, based on egoistic behavior, there was a remarkable correspondence between exchange equilibria in competitive markets and what in modern economic terms is called "the core" of the economy.
Alternatively, one could appeal to the folk theorem of repeated games and say any coerced or imposed solution can be replicated without coercion or paternalism.
An outcome is said to be in "the core" of the economy if and only if it fulfills a set of conditions of unimprovability.
But no outcome can be known to be in the core. Pareto improvements are always possible as technology or information changes.
These conditions, roughly speaking, are that not only is it the case that no one could be made better off without making somebody else worse off (the situation is what is called a "Pareto optimum"),
unless information changes. I discover that your vase is actually an authentic Chinese antique and give you tens of thousands of dollars to acquire it for my collection. We are both better off.
but also that no one is worse off than he would be without trade, and that no coalition of individuals, by altering the trade among themselves, could on their own improve their own lot. Edgeworth showed that given certain general assumptions, any equilibrium that can emerge in a competitive market must satisfy these conditions and be in "the core." Thus, in Edgeworth's model the competitive market equilibria are, in this sense, undominated by any feasible alternative.
Equally, if trade is allowed, the initial distribution by the Central planner will quickly be improved on.
More surprising in some ways was the converse result that if the number of individuals of each type were increased without limit, the core (representing such undominated outcomes) would shrink towards the set of competitive equilibria; that is, the core would not be much more extensive than the set of competitive equilibria.
Because market power or 'holdout problems' would disappear. This also follows from the Law of large numbers.
This pair of results has been much elaborated and extended in the recent literature on general equilibrium with similar models and with essentially the same behavioral assumptions. Being in the core, however, is not as such a momentous achievement from the point of view of social welfare.
It is impossible to avoid provided people are free to trade with whatever endowment they have or are given by the Planning authority.
A person who starts off ill endowed may stay poor and deprived even after the transactions,
also dead people will remain dead. More worryingly, there is a lot of evidence that men who engage in business transactions don't change gender. Nor do they turn into fairies. That's simply unfair. How can Social Welfare be achieved if magic is not ubiquitous?
and if being in the core is all that competition offers, the propertyless person may be forgiven for not regarding this achievement as a "big deal."
Dead people too may express disappointment- if they weren't already dead. More worrying is the fate of men who aren't routinely changing into women anytime they engage in a business transaction.
Edgeworth took some note of this by considering the problem of choice between different competitive equilibria. He observed that for the utilitarian good society, "competition requires to be supplemented by arbitration, and the basis of arbitration between self-interested contractors is the greatest possible sum-total utility."
But self-interested contractors will exit a jurisdiction where arbitrary arbitration keeps happening.
Into the institutional aspects of such arbitration and the far-reaching implications of it for the distribution of property ownership, Edgeworth did not really enter, despite superficial appearance to the contrary. On the basis of the achievement of competition, however limited, Edgeworth felt entitled to be "biassed to a more conservative caution in reform." In calculating "the utility of pre-utilitarian institutions," Edgeworth felt impressed "with a view of Nature, not, as in the picture left by Mill, all bad, but a first approximation to the best."
Darwinism would later prove a fruitful way to unite Economics to the Life Sciences through Game theory. This was useful which is why Sen would have none of it. He preferred to scold the economy because Men don't magically turn into women when they complete a business transaction nor do poor people suddenly become very rich.
I am not concerned in this essay with examining whether the approximation is a rather remote one. (This I do believe to be the case even within the structure of assumptions used by Edgeworth, but it is not central to the subject of this paper.)
Actually, it appears that both Nature and the Economy use 'regret minimizing' multiplicative weighting update algorithms. That's a useful thing to research which is why Sen-tentious fools won't do it.
I am concerned here with the view of man which forms part of Edgeworth's analysis
there is no view of man. There is merely an analysis of one type of behavior.
and survives more or less intact in much of modem economic theory.
Because economists who start sermonizing instead of economizing don't get paid unless they are very special little brown monkeys who deserve a nice Nobel prize because they come from a shithole and are as stupid as shit.
The view is, of course, a stylized one and geared specifically to tackling a relatively abstract dispute with which Spencer, Sidgwick, and several other leading contemporary thinkers were much concerned-namely, in what sense and to what extent would egoistic behavior achieve general good?
If it was 'enlightened' it would do so. If it was stupid, it wouldn't. But this was old news. The Vyadha in the Mahabharata- though a butcher by trade- is doing well for himself and society at large.
Whether or not egoistic behavior is an accurate assumption in reality does not, of course, have any bearing on the accuracy of Edgeworth's answer to the question posed.
Yes it does. In a typical business negotiation, is the Edgeworth box useful or not? The answer is, the bigger the piece of business in question and the smarter the negotiators, the more useful it is.
Within the structure of a limited economic model it provided a clear-cut response to the abstract query about egoism and general good.
No. It is not concerned with the ethics of the katechon or any such quasi theological controversy.
This particular debate has gone on for a long time and continues to provide motivation for many recent exercises in economic theory today.
Because there is too much economic theory today due to a too rapid expansion of Higher Education which created too great a number of useless Econ Professors.
The limited nature of the query has had a decisive influence on the choice of economic models and the conception of human beings in them. In their distinguished text on general equilibrium theory, Arrow and Hahn state (pp. vi-vii): There is by now a long and fairly imposing line of economists from Adam Smith to the present who have sought to show that a decentralized economy motivated by self-interest and guided by price signals would be compatible with a coherent disposition of economic resources that could be regarded, in a well-defined sense, as superior to a large class of possible alternative dispositions.
But any disposition which permits free trade would quickly achieve the same level of Pareto optimality. Thus the true question is about disincentive effects and disutility and expectations regarding both.
Moreover, the price signals would operate in a way to establish this degree of coherence. It is important to understand how surprising this claim must be to anyone not exposed to the tradition. The immediate "common sense" answer to the question "What will an economy motivated by individual greed and controlled by a very large number of different agents look like?" is probably: There will be chaos.
Unless there are public signals promoting a better correlated equilibria. Price signals are precisely those Aumann signals. However, it is not true that any developed economy has a very large number of different agents. Economies of scope and scale and 'regret minimizing' portfolio diversification will mean that most transactions are carried out by agents motivated by the desire not to get the sack or losing their license by failing to follow the rules.
That quite a different answer has long been claimed true and has indeed permeated the economic thinking of a large number of people who are in no way economists is itself sufficient ground for investigating it seriously. The proposition having been put forward and very seriously entertained, it is important to know not only whether it is true, but whether it could be true. A good deal of what follows is concerned with this last question, which seems to us to have considerable claims on the attention of economists.
Sadly Arrow's book was worthless because he committed the intensional fallacy and also failed to grapple with Knightian uncertainty. General equilibrium theory is completely useless and Arrow Debreu securities are potential 'weapons of financial mass destruction'. Sen's shite is in the Arrow-Debreu vein.
The primary concern here is not with the relation of postulated models to the real economic world, but with the accuracy of answers to well-defined questions posed with preselected assumptions which severely constrain the nature of the models that can be admitted into the analysis.
The answers are meaningless because they involve basic errors of a mathematical kind- e.g. treating something which isn't a set as a set or which isn't a function as a function or assuming that existence proofs mean something rather than nothing.
A specific concept of man is ingrained in the question itself,
Nope. There is a specific concept of scarcity and other specific concepts to do with expected utility and so forth.
and there is no freedom to depart from this conception so long as one is engaged in answering this question.
Nonsense! You can specify that a particular economic problem concerns elephants or unicorns rather than human problem. This won't alter the outcome.
The nature of man in these current economic models continues, then, to reflect the particular formulation of certain general philosophical questions posed in the past.
Rubbish! Our 'background information' is very different from that of past philosophers.
The realism of the chosen conception of man is simply not a part of this inquiry.
It must be. Our background information alters hermeneutics and thus is always a part of any inquiry we conduct.
There is another nonempirical-and possibly simpler-reason why the conception of man in economic models tends to be that of a self-seeking egoist.
It is because we don't want economists to start sermonizing rather than doing the boring statistical work we pay them to do.
It is possible to define a person's interests in such a way that no matter what he does he can be seen to be furthering his own interests in every isolated act of choice.
We can also define everything as the Nicaraguan horcrux of my neighbor's cat. The question is how much we can get paid for doing so?
While formalized relatively recently in the context of the theory of revealed preference,
which makes no mention of self-interest
this approach is of respectable antiquity,
no it isn't. There was little choice when commodities were few. You got what was available or went without. Its like when we were kids, Mum didn't ask us what we wanted for dinner. Any information we revealed about our preferences might get us a smack in the mouth.
and Joseph Butler was already arguing against it in the Rolls Chapel two and a half centuries ago.'
No. He clarified that passions are not principles. Hobbes had overegged his cake of horrors. Butler would say that the preferences we reveal are self-interested, rational, and such as promote the Good. Just as, in Corinthians, St Paul stresses that different people have different charismatic gifts but nevertheless are of one body in Christ, so too do different passions promote different ends which are in harmony with the katechon by God's mysterious economy.
The reduction of man to a self-seeking animal depends in this approach on careful definition.
Only because Sen is supplying that definition. But we could easily say 'if x buys y under price vector z, we define x to be the Nicaraguan horcrux of my neighbor's cat for any y and any z.' This is merely an arbitrary stipulation. It isn't any sort of reasoned argument.
If you are observed to choose x rejecting y, you are declared to have "revealed" a preference for x over y.
Only under certain conditions.
Your personal utility is then defined as simply a numerical representation of this "preference," assigning a higher utility to a "preferred" alternative. With this set of definitions you can hardly escape maximizing your own utility, except through inconsistency.
Nor can you escape being the Nicaraguan horcrux of my neighbor's cat. So what? What great harm befalls you thereby?
Of course, if you choose x and reject y on one occasion and then promptly proceed to do the exact opposite, you can prevent the revealed preference theorist from assigning a preference ordering to you,
no you can't. Your preference ordering will now have a different mathematical expression such that utility is affected by what was last consumed.
thereby restraining him from stamping a utility function on you which you must be seen to be maximizing.
Nope. It is easy enough to change the utility function so that it has a memory of what was last consumed.
He will then have to conclude that either you are inconsistent or your preferences are changing.
This simply isn't true. We get that if you had a burger for lunch, you don't want a burger for dinner. The maths aint that difficult.
You can frustrate the revealed-preference theorist through more sophisticated inconsistencies as well.
Why bother? No such beast is following you around trying to stamp anything upon you.
But if you are consistent, then no matter whether you are a single-minded egoist or a raving altruist or a class conscious militant, you will appear to be maximizing your own utility in this enchanted world of definitions.
This is equally true if you are inconsistent. Anyone can be defined as anything at all. Does Sen really lose any sleep over the fact that I have defined him as an inveterate gobbler of dog turds?
Borrowing from the terminology used in connection with taxation, if the Arrow-Hahn justification of the assumption of egoism amounts to an avoidance of the issue, the revealed preference approach looks more like a robust piece of evasion.
There is no issue. There really is an Income tax man who can fuck you up if you don't pay what you owe him. I may equally say 'Sen avoids admission that everything he does is, by definition- my definition- nothing but the devouring of dog turds. More seriously, he also evades the issue. However, what is truly diabolical is that he won't even come and eagerly devour all the dog turds littering my street!
This approach of definitional egoism sometimes goes under the name of rational choice, and it involves nothing other than internal consistency.
It involves complete and transitive preferences- which can't obtain under Knightian uncertainty.
A person's choices are considered "rational" in this approach if and only if
preferences are complete. Otherwise it is rational to do 'discovery' or 'experimentation'.
these choices can all be explained in terms of some preference relation consistent with the revealed preference definition, that is, if all his choices can be explained as the choosing of "most preferred" alternatives with respect to a postulated preference relation.'
This just means 'preferences are complete and transitivity obtains'. Sen has merely unpacked a definition. Similarly I could explain that Sen devours dog turds because no action by Sen is not, by definition- albeit mine alone- the eager mastication of steaming piles of canine poo.
The rationale of this approach seems to be based on the idea that the only way of understanding a person's real preference is to examine his actual choices,
just as the rationale of my approach is based on the idea that Sen exists and dog turds exist and, by definition, Sen eats dog turds.
and there is no choice-independent way of understanding someone's attitude towards alternatives.
Nobody has made any such claim. Revealed Preference was merely a way to get to a theory of consumer demand without using marginal utility. This was a response to the demand for 'operationalizable' economics free of mystical entities like utility.
(This view, by the way, is not confined to economists only. When, many years ago, I had to take my qualifying examination in English Literature at Calcutta University, one of the questions we had to answer concerning A Midsummer Night's Dream was: Compare the characters of Hermia and Helena. Whom would you choose?)
Bottom. More precisely Sen would choose a dog's bottom from which tasty turds might at any moment emerge. He is a greedy fellow- by my definition.
I have tried to demonstrate elsewhere that once we eschew the curious definitions of preference and welfare,
we can define Sen as a dog poo devourer even though he has never revealed a preference for dog turds nor would his welfare be enhanced by eating nothing else.
this approach presumes both too little and too much: too little because there are non-choice sources of information on preference and welfare as these terms are usually understood,
It is these sources of information I rely on for claiming that Sen eats only doggie doo doo.
and too much because choice may reflect a compromise among a variety of considerations of which personal welfare may be just one.
Moreover, Sen's not choosing dog poo as a snack shows that he is actually choosing nothing else. This is because there are a variety of considerations of which I will specify just one. It is funnier if Sen eats dog poo than if he ate ostrich shit. The opposite is the case for Pranab Bardhan.
The complex psychological issues underlying choice have recently been forcefully brought out by a number of penetrating studies dealing with consumer decisions and production activities.
because they occur under Knightian uncertainty with incomplete preferences
It is very much an open question as to whether these behavioral characteristics can be at all captured within the formal limits of consistent choice on which the welfare-maximization approach depends.
For any given purpose, sure. Why not?
Paul Samuelson has noted that many economists would "separate economics from sociology upon the basis of rational or irrational behavior, where these terms are defined in the penumbra of utility theory. "
That was true enough back then.
This view might well be resented, for good reasons, by sociologists, but the cross that economists have to bear in this view of the dichotomy can be seen if we note that the approach of "rational behavior," as it is typically interpreted, leads to a remarkably mute theory.
Who wants a theory which is constantly giving you back chat?
Behavior, it appears, is to be "explained in terms of preferences, which are in turn defined only by behavior."
Sen eats dog shit because he prefers it. Why else would he do so? It is simply a fact that people prefer things they like to things they don't and this does explain a lot of what they do in the economic realm. In religious matters, however, they may do the opposite- i.e. eat only what they dislike and choose only what mortifies their flesh.
Not surprisingly, excursions into circularities have been frequent.
This essay is an example. Sen creates a straw-man and belabors it because he created it for no other purpose.
Nevertheless, Samuelson is undoubtedly right in asserting that the theory "is not in a technical sense meaningless." The reason is quite simple. As we have already discussed, the approach does impose the requirement of internal consistency of observed choice, and this might well be refuted by actual observations, making the theory "meaningful" in the sense in which Samuelson's statement is intended. The requirement of consistency does have surprising cutting power. Various general characteristics of demand relations can be derived from it. But in the present context, the main issue is the possibility of using the consistency requirement for actual testing. Samuelson specifies the need for "ideal observational conditions" for the implications of the approach to be "refuted or verified." This is not, however, easy to satisfy since, on the one hand, our love of variety makes it illegitimate to consider individual acts of choice as the proper units (rather than sequences of choices) while, on the other hand, lapse of time makes it difficult to distinguish between inconsistencies and changing tastes. There have, in fact, been very few systematic attempts at testing the consistency of people's day-to-day behavior, even though there have been interesting and useful contrived experiments on people's reactions to uncertainty under laboratory conditions.
Sen forgets that most research on consumer behavior is not done by academics. It is done by marketing departments. The neo-classical theory of consumer demand holds up well enough in markets were preferences are complete, income and hedging effects are inconsequential etc, etc.
What counts as admissible evidence remains unsettled. If today you were to poll economists of different schools, you would almost certainly find the coexistence of beliefs (i) that the rational behavior theory is unfalsifiable, (ii) that it is falsifiable and so far unfalsified, and (iii) that it is falsifiable and indeed patently false.
More importantly, you would find that nobody thought the thing mattered in the slightest.
However, for my purposes here this is not the central issue. Even if the required consistency were seen to obtain, it would still leave the question of egoism unresolved except in the purely definitional sense, as I have already noted.
But there is no other type of 'question of egoism'. Why? The nature of the Self, like the nature of God, is a mystery. Indeed, Vedanta equates the two.
A consistent chooser can have any degree of egoism that we care to specify.
No. We don't know what egoism is or what degrees or gradations it comes in. An egoist may never want to be the slave of habit or to be seen as 'following the crowd'. Different grades of egoism may be expressed in eccentricity and outre behavior of a wholly unpredictable kind.
It is, of course, true that in the special case of pure consumer choice over private goods, the revealed preference theorist tries to relate the person's "preference" or "utility" to his own bundle of commodities. This restriction arises, however, not from any guarantee that he is concerned only with his own interests, but from the fact that his own consumption bundle-or that of his family is the only bundle over which he has direct control in his acts of choice. The question of egoism remains completely open.
Why then has Sen been making such heavy weather over it? He started of by saying that Revealed Preference is very evil because it depicts humans as selfish pigs. Now he is saying that the theory has no such implication. So, he has been getting worked up over nothing.
I believe the question also requires a clearer formulation than it tends to receive, and to this. question I shall now turn.
In other words, having admitted he had created a storm in a tea cup, he will now try to justify his histrionics with some 'clearer formulation' which he is incapable of producing.
As we consider departures from "unsympathetic isolation abstractly assumed in Economics," to use Edgeworth's words, we must distinguish between two separate concepts: (i) sympathy and (ii) commitment.
Why? We already distinguish between the two. When you tell me about how your wife beats you, I say 'I sympathize'. I show little inclination to go and beat her up on your behalf. Sympathy aint commitment. Hire a hitman to kill your wife and though he may not sympathize with your predicament, he is committed to ridding you of your tormentor.
The former corresponds to the case in which the concern for others directly affects one's own welfare.
Fuck off! Offering tea and sympathy doesn't affect one's own welfare- if one has nothing better to do.
If the knowledge of torture of others makes you sick,
you should 'manage the news' or else spend your life puking up over everything and everybody around you.
it is a case of sympathy;
nope. The thing is pathological.
if it does not make you feel personally worse off, but you think it is wrong and you are ready to do something to stop it, it is a case of commitment.
More particularly if you have been committed to an asylum for the criminally insane. The plain fact is that a guy who gets paid to do a certain type of job is committed to doing it. Some other guy who offers to do the job may not be able to do it. His commitment is to being a fucking waste of time.
I do not wish to claim that the words chosen have any very great merit, but the distinction is, I think, important.
But Sen alone does not understand either sympathy or commitment.
It can be argued that behavior based on sympathy is in an important sense egoistic, for one is oneself pleased at others' pleasure and pained at others' pain, and the pursuit of one's own utility may thus be helped by sympathetic action.
But, in that case, the action was utilitarian, not sympathetic. I like hugging people and give hugs to battered men who actually want me to go kill their wives. There is no sympathetic action here.
It is action based on commitment rather than sympathy which would be non-egoistic in this sense.
But an action based on commitment may be bought and paid for. The laborer is worthy of his hire- as the good book says.
(Note, however, that the existence of sympathy does not imply that the action helpful to others must be based on sympathy in the sense that the action would not take place had one got less or no comfort from others' welfare. This question of causation one is to be taken up presently.)
If the action is not based on sympathy it isn't a sympathetic action. Causation is implied, it can't be deferred to a later time, if you say an action is sympathetic.
Sympathy is, in some ways, an easier concept to analyze than commitment.
Yet Sen will fail because he is as stupid as shit.
When a person's sense of well-being is psychologically dependent on someone else's welfare, it is a case of sympathy;
No. It is a case of psychological dependence. Baby is not sympathetic to its drunken Mummy. It is dependent on her and wails and wails as she snores and snores.
By contrast is a wholly autonomous person may feel sympathy for even that drunken harridan even though her own felicity is unaffected by the latter.
other things given, the awareness of the increase in the welfare of the other person then makes this person directly better off.
I may hate my wife but am better off if she is in a good mood and doesn't beat me. Why does Sen think this means I have sympathy for my wife? What type of shitty Inglis they woz teeching him at Calcutta Uni?
(Of course, when the influence is negative, the relation is better named "antipathy," but we can economize on terminology and stick to the term "sympathy," just noting that the relation can be positive or negative.) While sympathy relates similar things to each other-namely, welfares of different persons-commitment relates choice to anticipated levels of welfare.
Nope. Commitment means carrying through an action with dedication and disregard for consequences. I say I am committed to killing your wife. I end up kissing her because this raises my anticipated level of welfare. You decide I wasn't really committed to helping you at all. I wasted your time.
One way of defining commitment is in terms of a person choosing an act that he believes will yield a lower level of personal welfare to him than an alternative that is also available to him.
That is not commitment. It is sacrifice. Why does Sen not know the difference? In Calcutta, there were plenty of lawyers who charged an arm and a leg but who were committed to getting their clients out of jail. This did not involve any sacrifice. It did involve dedication and forensic skill.
Notice that the comparison is between anticipated welfare levels, and therefore this definition of commitment excludes acts that go against self-interest resulting purely from a failure to foresee consequences.
Sen is a cretin. He has defined commitment not as involving getting a job done but as making a personal sacrifice without getting the job done. That's not commitment though it might be histrionic virtue signaling of some wholly mischievous type.
A more difficult question arises when a person's choice happens to coincide with the maximization of his anticipated personal welfare, but that is not the reason for his choice.
In which case there is no question to answer. We merely say that the choice was as predicted but the choice of reason was idiosyncratic.
If we wish to make room for this, we can expand the definition of commitment to include cases in which the person's choice, while maximizing anticipated personal welfare, would be unaffected under at least one counterfactual condition in which the act chosen would cease to maximize personal welfare.
In which case we could say Winston Churchill was committed to granting independence to India and Adolf Hitler was committed to helping Jews thrive and prosper in Germany. This because Birla would have given Churchill money and Rothschild would have given Hitler money such that their choice met the counterfactual condition of defeating their own purpose most thoroughly.
Commitment in this more inclusive sense
is sheer nonsense
may be difficult to ascertain not only in the context of others' choices but also in that of one's own, since it is not always clear what one would have done had the circumstances been different.
We say 'this guy is committed' iff he always finishes the job he takes up. Nothing less will do. A guy who says he is committed to finish the job but can't because he is shit may be termed enthusiastic but is not considered to be dedicated or committed. A commitment only exists if the capacity to follow through exists. There's no point getting a firm commitment from me to donate a billion dollars to your charity. I haven't a pot to piss in.
This broader sense may have particular relevance when one acts on the basis of a concern for duty which, if violated, could cause remorse, but the action is really chosen out of the sense of duty rather than just to avoid the illfare resulting from the remorse that would occur if one were to act otherwise. (Of course, even the narrower sense of commitment will cover the case in which the illfare resulting from the remorse, if any, is outweighed by the gain in welfare.)
Commitment is something separate from a general duty. All lawyers have a duty to do the best for their client. A committed lawyer is one who will go the extra mile in ways we might not want to look into too closely.
I have not yet referred to uncertainty concerning anticipated welfare.
Thus if you come to me and say 'I'm sure my soon to be wife will turn out to be a husband-beater', you may expect me to show sympathy for your anticipated 'illfare'. However you are unlikely to get any sympathy from me.
When this is introduced, the concept of sympathy is unaffected, but commitment will require reformulation.
Nope. We don't sympathize with people who complain that their beautiful new wife may turn out to be a harridan. However, if we have committed to killing her so her husband inherits her wealth, nothing would change.
The necessary modifications will depend on the person's reaction to uncertainty. The simplest case is probably the one in which the person's idea of what a "lottery" offers to him in terms of personal gain is captured by the "expected utility" of personal welfare (that is, adding personal welfares from different outcomes weighted by the probability of occurrence of each outcome). In this case, the entire discussion is reformulated simply replacing personal welfare by expected personal welfare; commitment then involves choosing an action that yields a lower expected welfare than an alternative available action.
This is risk, not uncertainty which is what actually obtains. We don't know all possible states of the world or what probability is associated with each of them. Expected utility can't be calculated. We should follow a regret minimizing approach.
(The broader sense can also be correspondingly modified.) In the terminology of modern economic theory, sympathy is a case of "externality."
No. An externality is received outside the market. There can be a market for sympathy though it may not be monetized. I sympathize as you whine about your wife. You sympathize as I whine about the Nicaraguan horcrux of my neighbor's cat. On the other hand, there are relationships- e.g. the family, the business enterprise, even a group of friends- which can act cohesively by 'internalizing externalities' in the Coasian sense and operating as such in the market. They would be 'in the core' jointly.
Many models rule out externalities, for example, the standard model to establish that each competitive equilibrium is a Pareto optimum and belongs to the core of the economy. If the existence of sympathy were to be permitted in these models, some of these standard results would be upset, though by no means all of them.
Not really. If you can accommodate the Beckerian family or Coasian firm, why not something a little looser?
But this would not require a serious revision of the basic structure of these models. On the other hand, commitment does involve, in a very real sense, counterpreferential choice, destroying the crucial assumption that a chosen alternative must be better than (or at least as good as) the others for the person choosing it, and this would certainly require that models be formulated in an essentially different way.
Nonsense! Commitment as representing the actual performance of an economic action would either be in the core or else rendered ineffectual by some coalition within the core. Thus the commitment of terrorists may be defeated by tax-payers funding an anti-terrorist strike force. However, the commitments of professionals would be in the core. You can hire committed surgeons or lawyers or even economists who will get the job done for you.
The contrast between sympathy and commitment may be illustrated with the story of two boys who find two apples, one large, one small.
The stronger boy gets the bigger apple. This is because boys are committed to beating the shit out of other boys weaker than themselves.
Boy A tells boy B, "You choose."
In which case boy A is stronger. B should pick the smaller apple. The alternative is getting beaten up and not even getting the smaller apple.
B immediately picks the larger apple. A is upset and permits himself the remark that this was grossly unfair.
Boys don't talk like that or, soon stop doing so after the shit has been kicked out of them often enough. Girls may be different. I believe they now prefer to knife each other rather than risk breaking their nails by scratching each other's eyes out.
"Why?" asks B. "Which one would you have chosen, if you were to choose rather than me?" "The smaller one, of course," A replies. B is now triumphant: "Then what are you complaining about? That's the one you've got!" B certainly wins this round of the argument, but in fact A would have lost nothing from B's choice had his own hypothetical choice of the smaller apple been based on sympathy as opposed to commitment.
A was being polite. But a boy who is polite is no sort of boy. The two should now scrap in the time honored way even if neither is particularly belligerent. The thing is a right of passage. Most great friendships begin with a fight in the playground.
A's anger indicates that this was probably not the case. Commitment is, of course, closely connected with one's morals.
Nope. A highly moral person may be ineffectual. Commitment is performative.
But moral this question is in a very broad sense, covering a variety of influences from religious to political, from the ill-understood to the well-argued. When, in Bernard Shaw's The Devil's Disciple, Judith Anderson interprets Richard Dudgeon's willingness to be hanged in place of her husband as arising from sympathy for him or love for her, Richard is adamant in his denial: "What I did last night, I did in cold blood, caring not half so much for your husband, or for you as I do for myself. I had no motive and no interest: all I can tell you is that when it came to the point whether I would take my neck out of the noose and put another man's into it, I could not do it. "
Because Dick really was a rebel. Also he didn't like the Parson and his wife. This was perfectly understandable. Anyway, for the rebel cause to succeed, a popular man like the Parson would be better placed to raise up the county against the Brits. Dick himself would be a good enough martyr for the good cause. Dick does have commitment because he can carry through his plan which was perfectly sound. The Brits want to hang the parson precisely because he is their most dangerous potential adversary. Let them hang the wrong man so that both indignation is created and the good folk have the leader they prefer.
The characteristic of commitment with which I am most concerned here is the fact that it drives a wedge between personal choice and personal welfare, and much of traditional economic theory relies on the identity of the two.
Nothing of the sort obtains in Shaw's play. The Parson and his wife are egoistic and bourgeois and sentimental. Dick, 'the Devil's disciple' thinks strategically like a true Revolutionary.
This identity is sometimes obscured by the ambiguity of the term "preference," since the normal use of the word permits the identification of preference with the concept of being better off,
nope. It just means what you prefer or are comfortable with. Lots of people prefer to have less money and more leisure.
and at the same time it is not quite unnatural to define "preferred" as "chosen."
only if freedom of choice exists
I have no strong views on the "correct" use of the word "preference," and I would be satisfied as long as both uses are not simultaneously made,
which they must be if freedom of choice exists
attempting an empirical assertion by virtue of two definitions.
but this assertion can be quickly verified by asking 'did you choose this coz you preferred it' and getting the answer 'D'uh! Obviously!'
The basic link between choice behavior and welfare achievements in the traditional models is severed as soon as commitment is admitted as an ingredient of choice.
But any action performed by reason of commitment which is economic becomes part of the menu of choice for some one else. If you choose to supply x then someone can demand to be supplied x by you. The link is automatically re-created.
"Fine," you might say, "but how relevant is all this to the kind of choices with which economists are concerned? Economics does not have much to do with Richard Dudgeon's march to the gallows."
Economics had much to do with the American Revolution. Basically, the Yanks didn't want to pay money to Mad King George. This commitment was expressed by killing Recoats till they ran away.
I think one should immediately agree that for many types of behavior, commitment is unlikely to be an important ingredient. In the private purchase of many consumer goods, the scope for the exercise of commitment may indeed be limited and may show up rather rarely in such exotic acts as the boycotting of South African avocados or the eschewing of Spanish holidays.
That is not commitment. It is mere gesture politics or virtue signaling. Buying guns and shooting supporters of the Apartheid regime would involve commitment.
Therefore, for many studies of consumer behavior and interpretations thereof, commitment may pose no great problem.
But commitment is extremely important when it comes to supply.
Even sympathy may not be extremely important, the sources of interpersonal interdependence lying elsewhere, for example, in the desire to keep up with the Joneses or in being influenced by other people's habits.
Knightian uncertainty means we can't be sure we won't end up poor or ill. That's what militates for risk pooling and a social minimum. Sympathy does not matter. It is always a case of 'there but for the grace of God go I' and that's why people will pay for a welfare safety net provided the thing poses no moral hazard.
But economics is not concerned only with consumer behavior; nor is consumption confined to "private goods." One area in which the question of commitment is most important is that of the so-called public goods.
You want an army absolutely committed to fucking over foreign enemies. That's true enough.
These have to be contrasted with "private goods" which have the characteristic that they cannot be used by more than one person: if you ate a piece of apple pie, I wouldn't consider devouring it too. Not so with "public goods," for example, a road or a public park, which you and I may both be able to use. In many economic models private goods are the only ones around, and this is typically the case when the "invisible hand" is given the task of doing visible good. But, in fact, public goods are important in most economies and cover a wide range of services from roads and street lighting to defense. There is much evidence that the share of public goods in national consumption has grown rather dramatically in most countries in the world.
Because of two world wars and then a nuclear arms race and proxy wars all over the place. But this in turn meant investing in a more educated and productive and innovative population.
The problem of optimal allocation of public goods has also been much discussed, especially in the recent economic literature. A lot of attention, in particular, has been devoted to the problem of correct revelation of preferences. This arises most obviously in the case of subscription schemes where a person is charged according to benefits received. The main problem centers on the fact that it is in everybody's interest to understate the benefit he expects, but this understatement may lead to the rejection of a public project which would have been justified if true benefits were known. Analysis of this difficulty, sometimes referred to as the "free rider" problem, has recently led to some extremely ingenious proposals for circumventing this inefficiency within the framework of egoistic action.
As technology improved, this problem faded. Sadly, technological change is now so rapid that we have increased Knightian Uncertainty. Moreover, state capacity in public good provision has probably declined quite severely.
The reward mechanism is set up with such ungodly cunning that people have an incentive to reveal exactly their true willingness to pay for the public good in question. One difficulty in this solution arises from an assumed limitation of strategic possibilities open to the individual, the removal of which leads to an impossibility result.
But everything led to an impossibility result which is why Econ Journals stopped publishing Social Choice shite.
Another difficulty concerns the fact that in giving people the incentive to reveal the truth, money is handed out and the income distribution shifts in a way unguided by distributional considerations. This effect can, of course, be undone by a redistribution of initial endowments and profit shares, but that action obviously raises difficulties of its own.
Tech has removed those difficulties. It may be that Alexa knows me better than I do myself. Preference revelation aint the problem it was assumed to be. There is 'discovery' in mechanism design such that unlooked dynamic benefits can be reaped.
Central to this problem is the assumption that when asked a questtion, the individual gives that answer which will maximize his personal gain. How good is this assumption? I doubt that in general it is very good. ("Where is the railway station?" he asks me. "There," I say, pointing at the post office, "and would you please post this letter for me on the way?" "Yes," he says, determined to open the envelope and check whether it contains something valuable.)
This is crazy shit. Nobody trusts a letter to a stranger for precisely this reason. Sen's rational fool is just a fool.
Even in the particular context of revelation of preferences for public goods the gains-maximizing behavior may not be the best assumption. Leif Johansen, one of the major contributors to public economics, is, I think, right to question the assumption in this context: Economic theory in this, as well as in some other fields, tends to suggest that people are honest only to the extent that they have economic incentives for being so.
More importantly, they won't take stupid surveys unless paid to do so and even then may just submit random answers.
This is a homo oeconomicus assumption which is far from being obviously true, and which needs confrontation with observed realities. In fact, a simple line of thought suggests that the assumption can hardly be true in its most extreme form. No society would be viable without some norms and rules of conduct.
Unless it has effective screening and signaling mechanisms such that a 'separating equilibrium' arises where trust-based transactions can burgeon in a non linear fashion. On the other hand, you can have lots of norms and rules of behavior surrounding how to kill and rob people without any economy to speak of.
Such norms and rules are necessary for viability exactly in fields where strictly economic incentives are absent and cannot be created.
In which case the Society is not viable at all. It will go extinct along with its norms and rules. Eating food is an economic incentive. If it is absent, people will starve.
What is at issue is not whether people invariably give an honest answer to every question,
they tell you to fuck off.
but whether they always give a gains maximizing answer, or at any rate, whether they give gains-maximizing answers often enough to make that the appropriate general assumption for economic theory.
why the fuck would they when they'd gain more by telling you to fuck the fuck off?
The presence of non-gains-maximizing answers, including truthful ones, immediately brings in commitment as a part of behavior.
So if Sen asks me where the gents toilet is located and I answer 'Hoondla is a purple catachresis', I have shown commitment as part of my behavior.
The question is relevant also to the recent literature on strategic voting.
which is boring shite.
A number of beautiful analytical results have recently been established showing the impossibility of any voting procedure satisfying certain elementary requirements and making honest voting the gains-maximizing strategy for everyone. The correctness of these results is not in dispute, but is it appropriate to assume that people always do try to maximize personal gains in their voting behavior?
It is correct to assume that nobody cares about the answer to this silly question.
Indeed, in large elections, it is difficult to show that any voter has any real prospect of affecting the outcome by his vote, and if voting involves some cost, the expected net gain from voting may typically be negative. Nevertheless, the proportion of turnout in large elections may still be quite high, and I have tried to argue elsewhere that in such elections people may often be "guided not so much by maximization of expected utility, but something much simpler, viz, just a desire to record one's true preference."
Or they may be following the Muth rational strategy which is to behave in accordance with the prediction of the correct economic theory.
If this desire reflects a sense of commitment, then the behavior in question would be at variance with the view of man in traditional economic theory.
No it wouldn't. People may be committed to Muth rationality which is perfectly 'traditional'. Adaptive expectations is not. It is stupid shit.
The question of commitment is important in a number of other economic contexts.
So this cretin keeps saying but he can offer no proof.
It is central to the problem of work motivation,
in which case commitment simply means doing the job you committed yourself to doing.
the importance of which for production performance can hardly be ignored.
so producing a thing as specified is commitment which, it turns out, has always been at the heard of the Supply side of the Market equation. Neither Sen's sympathy (which for him means joint-utility) nor Sen's commitment didn't already exist in traditional econ.
It is certainly costly and may be impossible to devise a system of supervision with rewards and punishment such that everyone has the incentive to exert himself. Every economic system has, therefore, tended to rely on the existence of attitudes toward work which supersedes the calculation of net gain from each unit of exertion.
Which is why bosses don't need to pay workers. All they need to do is to ensure that random hobos suddenly develop a commitment to doing a fantastic job for them without asking for any payment.
Social conditioning plays an extremely important part here.
Very true. Save money on wages and salaries. Social conditioning will ensure your workforce shows up on time and works with dedication and commitment without asking you for a penny.
I am persuaded that Britain's present economic difficulties have a great deal to do with work-motivation problems that lie outside the economics of rewards and punishments, and one reason why economists seem to have so little to contribute in this area is the neglect in traditional economic theory of this whole issue of commitment and the social relations surrounding it.
White peeps be stooopid. Instead of paying workers, they should lecture them on commitment and 'social relations'. Then they won't go on strike for higher wages because they don't get any fucking wages. Indeed, they should pay for the privilege of having a job!
These questions are connected, of course, with ethics, since moral reasoning influences one's actions, but in a broader sense these are matters of culture, of which morality is one part.
Sen had run off with his best friend's wife. Such was the morality inculcated by Bengali culture.
Indeed, to take an extreme case, in the Chinese "cultural revolution" one of the primary aims was the increase of the sense of commitment with an eye on economic results: "the aim of the Great Proletarian Cultural Revolution is to revolutionize people's ideology and as a consequence to achieve greater, faster, better and more economical results in all fields of work."
Sen, it seems was buying Joan Robinson's line at that time. He didn't know that the Cultural Revolution had been a fucking disaster. On the other hand, it achieved Maos' aim of eliminating his rivals.
Of course, China was experimenting with reducing dramatically the role of material incentives in production, which would certainly have increased the part that commitment was meant to play, but even within the traditional systems of payments, much reliance is usually placed on rules of conduct and modes of behavior that go beyond strictly economic incentives.
Avoiding painful torture or execution is an economic incentive which Mao knew well how to apply.
To run an organization entirely on incentives to personal gain is pretty much a hopeless task.
Which is why Goldman Sachs appointed Mother Theresa as its CEO. Its best performing partners are rewarded by being allocated their own personal leper whose feet they get to wash while their less successful colleagues look on enviously.
I will have a bit more to say presently on what might lie behind the sense of commitment,
his first wife could probably have said more about Sen's sense of commitment as would his best friend- whose wife he ran off with.
but I would like to emphasize at this stage that the morality or culture underlying it may well be of a limited kind far removed from the grandeur of approaches such as utilitarianism.
Utilitarianism is pawky. It gives us the Battersea Power Station. The Greeks gave us the Parthenon.
The "implicit collusions" that have been observed in business behavior in oligopolies seem to work on the basis of a system of mutual trust and sense of responsibility
Sen is being foolish. The Seventies- in the UK- saw some savage price-wars between supermarkets. The more efficient producer can't cut prices because the less efficient has deeper pockets and will win a price war.
which has well-defined limits, and attempts at "universalization" of the same kind of behavior in other spheres of action may not go with it at all.
Tit for tat along with punishing those who fail to retaliate is sufficient. To be fair, this may not have been shown in the mid-Seventies.
There it is strictly a question of business ethics which is taken to apply within a fairly limited domain. Similarly, in wage negotiations and in collective bargaining the sense of solidarity on either side may have well-defined limits, and may not fit in at all with an approach such as that of general utilitarianism.
Sen came from a country where the 'Goodwin class-struggle' model was first mooted. It was a Volterra type predator-prey model. But Goodwin and Haldane (Leftists both) decided that capitalists were the sheep, Trade Unions were the wolves. Britain turned against the Unions because the taxpayer who was being robbed belonged to the same class as the feather-bedded public sector worker. You can rob Peter to pay Paul. Paul refuses to be robbed so as to himself get a fraction of the loot
Edgeworth's implicit assumption, on which I commented earlier, that egoism and utilitarianism exhaust the possible alternative motivations,
There was no such assumption on anybody's part. Butler and his successors stressed the importance of conscience- synderesis was the Scholastic term- but Edgeworth thought the conscience would never prefer one's own good to a greater good for another. Sadly, Edgeworth did not spend his time giving beejays to homeless people and thus had a defective conscience.
will be especially unhelpful in this context. While the field of commitment may be large, that of commitment based on utilitarianism and other universalized moral systems may well form a relatively small part of it.
A commitment to a particular action or non-multiply realizable outcome may be evaluated by a utilitarian calculus- e.g. Edgeworth sucking off homeless dudes rather than giving boring lectures- but otherwise the thing is empty. If there is no 'normative link' to a particular action, then commitment is not itself an action.
VII The economic theory of utility, which relates to the theory of rational behavior, is sometimes criticized for having too much structure; human beings are alleged to be "simpler" in reality.
The criticism is that the economic theory assumes too much in the way of information and cognitive processing. In particular, it assumes that people can instantly instantaneously access solutions in an exponential time class.
If our argument so far has been correct, precisely the opposite seems to be the case: traditional theory has too little structure. A person is given one preference ordering, and as and when the need arises this is supposed to reflect his interests, represent his welfare, summarize his idea of what should be done, and describe his actual choices and behavior.
We can show that such a preference function exists though computing it may take much longer than the lifetime of the universe. Before getting to that function, we could have a whole bunch of functions describing the person at different times. This is Jack in the morning when he wants cornflakes. This is Jack in the evening when he wants a curry and a beer. But, provided Jack has only one body, all these different functions will ultimately be soldered together to get just one function.
Can one preference ordering do all these things?
Sure. The domain of Jack's Choice function is Jack's genidentity or development over time. You are mapping from his world-line to a configuration space.
A person thus described may be "rational" in the limited sense of revealing no inconsistencies in his choice behavior, but if he has no use for these distinctions between quite different concepts, he must be a bit of a fool.
Nobody has any use for distinctions between stupid concepts used by senile professors. I don't need a mathematical function to know my preferences. I may need something of that sort for the millions of customers my company hopes to gain by marketing widgets.
The purely economic man is indeed close to being a social moron.
This is like saying the tailor's dummy is close to being lacking in fashion sense. Economic man means the typical agent of an economic transaction. If you want to make money or save money you need a mental picture of this being who reacts predictably to changes in price and Income and so forth. But no businessman thinks Jack or Jill who buys his product corresponds to the model described by the Market Research consultant.
Economic theory has been much preoccupied with this rational fool decked in the glory of his one all-purpose preference ordering.
Only in the sense that the tailor is preoccupied with making nice clothes for his dummy. The truth is quite different. The dummy is useful to the tailor so that he can make better clothes to sell to Jack and Jill.
To make room for the different concepts related to his behavior we need a more elaborate structure. What kind of a structure do we need?
As a matter of fact marketing departments have customized structures of great sophistication. Had Sen studied Econometrics, he'd have been aware of this. In particular, he'd understand that the relevant 'economic man' for any given purpose would be the one with most 'Granger causality'. Obviously, the maths has moved on a lot since then and the predictive software used by Amazon etc. has an economic model of me far exceeding my own knowledge of myself. For example, I didn't know I'd prefer wearing women's underwear. Amazon suggested I would on the basis of what I watch on Amazon Prime.
A bit more room up top is provided by John Harsanyi's important distinction between a person's "ethical" preferences and his "subjective" preferences:
how is it important? Everyone knows one should prefer to read Scripture but, subjectively, Robert Ludlum is what hits the spot.
"the former must express what this individual prefers (or, rather would prefer), on the basis of impersonal social considerations alone,
why not Divine considerations? There is a small market for ethical shite. Sen was supplying this- to virtue signaling shitheads whom we all now revile.
and the latter must express what he actually prefers, whether on the basis of his personal interests or on any other basis."
this is where the money is. You can make a little money off people who want to pretend to be better than they are- by selling them ethical shite. But the big money is in stuff they actually enjoy.
This dual structure permits us to distinguish between what a person thinks is good from the social point of view and what he regards as good from his own personal point of view.
How? We don't have access to that information. We can't tell if a person is lying just by defining a truth function for him.
Presumably sympathy enters directly into the so-called subjective preference,
why? We can sympathize with people while still doing what is best for ourselves.
but the role of commitment is left somewhat unclear.
Because either it is subjective or it is just virtue signaling.
Insofar as a person's "subjective" preferences are taken to "define his utility function," the intention seems to be to exclude commitment from it, but an ambiguity arises from the fact that these are defined to "express his preferences in the full sense of the word as they actually are." Is this in the sense of choice, or in the sense of his conception of his own welfare?
In the sense of choice. Nobody needs to have something as useless as a 'conception of his own welfare' or a conception of that conception, in order to get on with life in a better manner than some stupid pedant.
Perhaps Harsanyi intended the latter, since "ethical" preferences are by contrast given the role of expressing "what he prefers only in those possibly rare moments when he forces a special impartial and impersonal attitude on himself."
But which he would repudiate if you tried to use it against him.
But what if he departs from his personal welfare maximization (including any sympathy), not through an impartial concern for all but through a sense of commitment to some particular group, say to the neighborhood or to the social class to which he belongs?
Then that's his personal welfare maximization. There is only way Sen can get to talk this nonsense. That is if Jack could split into two bodies- one 'ethical', the other 'subjective'. Come to think of it, there was a Superman movie back then where some particular type of kryptonite causes the superhero to split into the good American, Clark Kent, and the nasty immigrant from another planet.
The fact is we are still short of structure.
Sen would ultimately commit to multiple identities. Everybody can split into lots of different people. I suppose, the axiom of choice allows this by the Banach-Tarski paradox.
Even in expressing moral judgments from an impersonal point of view, a dual structure is deficient. Surely a preference ordering can be more ethical than another but less so than a third. We need more structure in this respect also. I have proposed elsewhere-at the I972 Bristol conference on "practical reason"-that we need to consider rankings of preference rankings to express our moral judgments.
In which case we have an infinite regress of rankings of rankings of rankings. That's why 'preference' must be a Tarskian primitive- i.e. undefined. But that also means there can be no mathematical theory of preference because the underlying set would be undefined. On the other hand, there could be an operationalizable 'revealed preference' reflecting what actual econometricans do. But there'd be little point wasting more than a week of an Econ 101 course on the topic.
I would like to discuss this structure a bit more. A particular morality can be viewed,
only by God- if He takes an interest in such things.
not just in terms of the "most moral" ranking of the set of alternative actions, but as a moral ranking of the rankings of actions (going well beyond the identification merely of the "most moral" ranking of actions).
i.e. some moralities are more moral than others. But if it is immoral to waste time talking bollocks there is no second order ranking because the cognitive cost of making it crowds out first order moral ranking. This is a bit like 'renormalization' or the cancelling out of zeroes.
Let X be the set of alternative and mutually exclusive combinations of actions under consideration,
X can't be a set because its elements are not well defined for any action under consideration in econ. If X's elements are well defined then the action of ranking either does not change an element- in which case the ranking is a subset of x- or it does- in which case X was not complete and thus not a set.
and let Y be the set of rankings of the elements of X.
Either ranking changes the element or ranking doesn't matter. In the case of moral rankings, an action changes once morality becomes salient. The alternative is no longer 'buy x' it is 'disregard morality and buy x'.
A ranking of the set Y (consisting of action-rankings) will be called a meta-ranking of action-set X.
But Y is a subset of X unless ranking makes a difference in which case X was not a set to begin with. Essentially, introducing considerations of morality or aesthetics or spirituality or patriotism or whatever changes the nature of the alternative. Another way of saying the same thing is that the actual 'action set' involves more than choosing x over y. It includes intentions and ideals and strategic considerations of a complex type. If this actual action-set were accessible, then all information about ranking or meta-ranking would be included in its elements.
It is my claim that a particular ranking of the action-set X is not articulate enough to express much about a given morality,
Only because we don't know the actual action set. If we did we would have all available information about everything under the sun.
and a more robust format is provided by choosing a meta-ranking of actions (that is, a ranking of Y rather than of X).
This is the opposite of robust. It is highly arbitrary and unstable. There would be 'framing' effects and other such monkey-shines. If, at the meta-level, we find we can't do what we want to do, we just appeal to the meta-meta level.
Of course, such a meta-ranking may include inter alia the specification of a particular action-ranking as the "most moral," but insofar as actual behavior may be based on a compromise between claims of morality and the pursuit of various other objectives (including self-interest), one has to look also at the relative moral standings of those action-rankings that are not "most moral."
But if we do, we soon decide that everything is very immoral except us getting to do what we like. The other problem is that once moral considerations are introduced the action set changes because some moralities have a pysicalist meta-language- e.g. it is wrong to eat meat because of its effect on the planet or because of the influx of bad karma binding particles.
Sen's mistake is a logical one. He assumes that a set is well defined when, for his purpose, it couldn't be so at all.
To illustrate, consider a set X of alternative action combinations and the following three rankings of this action-set X: ranking A representing my personal welfare ordering (thus, in some sense, representing my personal interests), ranking B reflecting my "isolated" personal interests ignoring sympathy (when such a separation is possible, which is not always so), and ranking C in terms of which actual choices are made by me (when such choices are representable by a ranking, which again is not always so). The "most moral" ranking M
is now well defined because 'moral' is arbitrary not canonical. On the other hand, there may be some 'buck stopped' conventional moralities- e.g. Islamic or Catholic- such that there is a protocol bound solution which is 'impersonal'. It is unlikely to coincide with A or B or C.
can, conceivably, be any of these rankings A, B, or C. Or else it can be some other ranking quite distinct from all three. (This will be the case if the actual choices of actions are not the "most moral" in terms of the moral system in question, and if, furthermore, the moral system requires sacrifice of some self-interest and also of "isolated" self-interest.) But even when some ranking M distinct from A, B, and C is identified as being at the top of the moral table, that still leaves open the question as to how A, B, and C may be ordered vis-a-vis each other.
No. If there is a robust or 'impersonal' ranking M, then it has a metric for the sinfulness of any action. A complete deontic system has that property. It is why many people choose to live by very detailed theological or moral codes in which only supererogatory acts represent a scandal.
If, to take a particular example, it so happens that the pursuit of self-interest, including pleasure and pain from sympathy, is put morally above the pursuit of "isolated" self-interest (thereby leading to a partial coincidence of self-interest with morality), and the actual choices reflect a morally superior position to the pursuit of self-interest (perhaps due to a compromise in the moral direction), then the morality in question precipitates the meta-ranking M, C, A, B, in descending order. This, of course, goes well beyond specifying that M is "morally best." The technique of meta-ranking permits a varying extent of moral articulation.
It is unnecessary. The Moralist has a ready made code and a 'representative agent'. There is a Stalnaker-Lewis 'closest possible' moral world and a metric for deviation. Priests and Ideologues and Virtue Signaling pedagogies have been making a living by prescribing in such matters.
It is not being claimed that a moral meta-ranking must be a complete ordering of the set Y, that is, must completely order all rankings of X. It can be a partial ordering, and I expect it often will be incomplete, but I should think that in most cases there will be no problem in going well beyond the limited expression permitted by the twofold specification of "ethical" and "subjective" preferences. The rankings of action can, of course, be ordered also on grounds other than a particular system of morality: meta-ranking is a general. This presupposes some "independence" among the different elements influencing the level of overall welfare, implying some "separability' technique usable under alternative interpretations of the meta-ranking relation. It can be used to describe a particular ideology or a set of political priorities or a system of class interests.
No. The description would be intensional. It could be embodied or exemplified by an ordering- but not uniquely unless it is 'buck stopped'- e.g. a Pope gets the final say.
In quite a different context, it can provide the format for expressing what preferences one would have preferred to have ("I wish I liked vegetarian foods more," or "I wish I didn't enjoy smoking so much").
This is foolish. Nobody needs some special format to say things like 'Vegetarian food is more ethical. Shame I hate that shite' or 'Fuck you coffin nails! You'll be the death of me.'
Or it can be used to analyze the conflicts involved in addiction ("Given my current tastes, I am better off with heroin, but having heroin leads me to addiction, and I would have preferred not to have these tastes").
That's not analysis. That's stupidity. Anyway, Econ 101 teaches you that addictive goods change your preferences. You don't keep taking heroin coz you like it but because going cold turkey is fucking horrible.
Unlike Sen, Homo economicus uses available information about how consuming certain things can alter preferences so as to avoid demerit goods while cultivating a taste for merit goods. Meanwhile Sen wasted his time interrogating inaccessible orderings to discover things about morality.
The tool of meta-rankings
can't be used because we have no access to them.
can be used in many different ways in distinct contexts.
But it never has been and never will be.
This is clearly not the occasion to go into a detailed analysis of how this broader structure permits a better understanding of preference and behavior.
No such occasion would ever present itself because the thing was nonsense.
A structure is not, of course, a theory,
more particularly if it does not exist
and alternative theories can be formulated using this structure. I should mention, however, that the structure demands much more information than is yielded by the observation of people's actual choices, which would at most reveal only the ranking C. It gives a role to introspection and to communication. To illustrate one use of the apparatus, I may refer to some technical results. Suppose I am trying to investigate your conception of your own welfare. You first specify the ranking A which represents your welfare ordering.
No you don't. Nobody knows this ranking. We have expectations regarding things we are familiar with and may mention stuff which we've heard others like us have tried and liked but we don't have enough information or cognitive capacity to specify our own welfare ordering.
But I want to go further and get an idea of your cardinal utility function, that is, roughly speaking, not only which ranking gives you more welfare but also by how much.
Sen's cardinal utility function involved running away with his best friend's wife. But he didn't know- indeed, even his best friend didn't know (unless he had slept with Sen's first wife)- what the increment in cardinal utility would be.
I now ask you to order the different rankings in terms of their "closeness" to your actual welfare ranking A, much as a policeman uses the technique of photofit: is this more like him, or is that? If your answers reflect the fact that reversing a stronger preference makes the result more distant than reversing a weaker intensity of preference, your replies will satisfy certain consistency properties, and the order of rankings will permit us to compare your welfare differences between pairs. In fact, by considering higher and higher order rankings, we can determine your cardinal welfare function as closely as you care to specify.
No. There is an infinite regress which is highly path dependent and fluctuates wildly. By the time you get to your meta-meta-meta- preferences you are babbling nonsense. If the interrogation continues you shit yourself.
I am not saying that this type of dialogue is the best way of discovering your welfare function, but it does illustrate that once we give up the assumption that observing choices is the only source of data on welfare, a whole new world opens up, liberating us from the informational shackles of the traditional approach.
Which is why Market Research involves surveys and focus groups and so forth.
There is a separate question. Can purely mathematical information yield information of a 'natural language' sort? The answer is no. However, it could refute a 'natural language' explanation. But it couldn't itself provide a unique natural language answer. This because natural language features co-evolution of expression and reception. Math may one day have some such mechanism but by then natural language will have moved on.
This broader structure has many other uses, for example, permitting a clearer analysis of akrasia-the weakness of will-
But Sen hasn't provided any such thing. Indeed, talk of meta or meta-meta preferences yields an excellent excuse for Hamlet like indecision.
and clarifying some conflicting considerations in the theory of liberty, which I have tried to discuss elsewhere.
Sen can't clarify shit. Liberty means telling Sen-tentious tossers to fuck the fuck off.
It also helps in analyzing the development of behavior involving commitment in situations characterized by games such as the Prisoners' Dilemma.
Fifty years later, we can safely say this isn't true at all.
This game is often treated, with some justice, as the classic case of failure of individualistic rationality. There are two players and each has two strategies, which we may call selfish and unselfish to make it easy to remember without my having to go into too much detail. Each player is better off personally by playing the selfish strategy no matter what the other does, but both are better off if both choose the unselfish rather than the selfish strategy. It is individually optimal to do the selfish thing: one can only affect one's own action and not that of the other, and given the other's strategy-no matter what-each player is better off being selfish. But this combination of selfish strategies, which results from self-seeking by both, produces an outcome that is worse for both than the result of both choosing the unselfish strategy. It can be shown that this conflict can exist even if the game is repeated many times.
This only works with amateurs. Professional criminals have evolved a superior mechanisms for turning the penal system into a profit center for themselves. The lower ranked criminal confesses and exonerates the higher ranked criminal. This enables him to rise up within the prison wing of the organization.
Some people find it puzzling that individual self-seeking by each should produce an inferior outcome for all, but this, of course, is a well-known conflict, and has been discussed in general terms for a very long time. Indeed, it was the basis of Rousseau's famous distinction between the "general will" and the "will of all."
The 'stationary bandit' or Hobbesian Leviathan makes a good profit arbitraging this divide. Sen doesn't get that the 'reverse game theory' that is mechanism design is what concerns homo economicus.
But the puzzle from the point of view of rational behavior lies in the fact that in actual situations people often do not follow the selfish strategy.
Because, in 'actual situations', the payoff matrix aint what the pedants say. The fact is if you keep shtum, your lawyer may be able to break the prosecutor's case in all sorts of ways.
Real life examples of this type of behavior in complex circumstances are well known, but even in controlled experiments in laboratory conditions people playing the Prisoners' Dilemma frequently do the unselfish thing. In interpreting these experimental results, the game theorist is tempted to put it down to the lack of intelligence of the players: "Evidently the run-of-the-mill players are not strategically sophisticated enough to have figured out that strategy DD [the selfish strategy] is the only rationally defensible strategy, and this intellectual short-coming saves them from losing."
But the guy knows he isn't actually going to go to jail.
A more fruitful approach may lie in permitting the possibility that the person is more sophisticated than the theory allows and that he has asked himself what type of preference he would like the other player to have, and on somewhat Kantian grounds has considered the case for himself having those preferences, or behaving as if he had them.
This is simply a game. If both cooperate, the payoff is bigger. In a repeated game we would expect is double Tit for Tat- i.e. cooperate but punish twice if the other defects. But, precisely because it is just a game, there is little point running these experiments.
This line of reasoning requires him to consider the modifications of the game that would be brought about by acting through commitment (in terms of "revealed preferences," this would look as if he had different preferences from the ones he actually had),
No. Either you have a commitment or you don't. The preference you reveal is the commitment- if it exists. In a repeated game, preferences are not revealed. Everybody prefers the cooperative solution. But that is not what is expressed. What is expressed is an expectation or a strategy.
and he has to assess alternative behavior norms in that light.
Tit for Tat is a commitment. Sen does not understand that Revealed Preference does not apply to strategic situations. It only applies where everybody is a price taker. Sen truly is shit at Econ. He starts off by quoting Edgeworth but doesn't get that preferences aren't expressed under bilateral monopoly. The game is strategic and will feature 'hold-out'. It is only when markets are open that no preference revelation problem arises.
I have discussed these issues elsewhere; thus I shall simply note here that the apparatus of ranking of rankings assists the reasoning which involves considering the merits of having different types of preferences (or of acting as if one had them).
This is nonsense. In a one period economy ranking rankings only results in a ranking. There is no separate meta-ranking. But in the intertemporal case there are only two possibilities, either the ranking is the same in period n+1 as in period n, or it isn't. But this just means preferences have either changed or haven't changed. Once again there is no separate meta-preference. Suppose there is a 'life-plan' such that revealed preference changes in a particular manner- e.g. a conventional child becomes a conventional adult and conforms to type to the end of his day- then we could say there is a genidentity with a particular inter-temporal revealed preference. We won't say there are meta-preferences. Still, at the margin, we might say 'x struggled between hedonism and religion- sometimes he feasted and fucked, at other times he fasted and scourged himself' but this is a preference to alternate between two life-styles. Sen simply doesn't understand inter-temporality.
Suppose we observe a person farting. We might debate whether the fart was voluntary or involuntary or loud or smelly. We might rank farts differently and such rankings may themselves be ranked by professional comedians who specialize in a vulgar type of humor. But we would not say that there was any such thing as a meta-fart.
Like farts, choices are made when they can't be postponed or else a greater benefit is received by making it sooner rather than later. Linking choices to preferences is useful in economics only when changes in the price or endowment vector override psychological or other proclivities. This notion is captured by elasticity. If the thing is inconsequential, there is no elasticity to speak off. The thing is not economic.
VIII Admitting behavior based on commitment would, of course have far reaching consequences on the nature of many economic models.
This simply hasn't happened because Sen was talking bollocks.
I have tried to show why this change is necessary and why the consequences may well be serious.
Very true. People may get the impression that I prefer to watch porn rather than read Scripture on the internet. Sadly, there is no way for my meta viewing preferences to get recorded somewhere on the internet. The consequences of this have been very serious for me. I was expelled from Pope School. Even my request to be considered for a job as a Cardinal was rejected by the Vatican.
Many issues remain unresolved, including the empirical importance of commitment as a part of behavior,
but commitment shows up immediately as action. On open markets, or where no strategic considerations, arise, this is revealed preference and nothing else. Strategic commitment in a repeated game is still a revealed preference though it take some time to find out what it is. This is because strategic actions are likely to mask themselves. But economists already knew there were preference revelation problems in such cases. Thus commitment does not change anything.
Sen was writing at a time when incomplete contract theory was yet to burgeon. Does 'commitment' feature in it? In a sense, yes- but it is in a negative 'hold-up' sense. This means that property rights (i.e. endowments)may have to change to minimize 'efficiency losses'. So commitment is economic. It involves risk to your endowment. But that comes out in the wash as revealed preference.
which would vary, as I have argued, from field to field. I have also indicated why the empirical evidence for this cannot be sought in the mere observation of actual choices, and must involve other sources of information, including introspection and discussion.
In which case there would be no preference revelation problem. The fact is people lie. Worse, there is a good reason why evolution would want to prevent us from knowing our own true preferences. Were this information not hidden away, a predator or parasite could 'hack' it. Newcombe problems or Kavka toxin shed light on why commitment, like belief, should be strategic and deceptive.
There remains, however, the issue as to whether this view of man amounts to seeing him as an irrational creature.
what Sen means is that a guy who has a commitment to Religion- for the excellent utility maximizing reason that Heaven is thus attained- is irrational.
Much depends on the concept of rationality used,
Revealed preference is not a concept of rationality. It is a useful assumption which says if a reason for an action held good in the past, it will hold good in the future, ceteris paribus. It does not itself make have a theory of what Reason might be. Furthermore, revealed preference can be used to predict the behavior of plants or animals. It makes no assumption about sentience.
and many alternative characterizations exist. In the sense of consistency of choice, there is no reason to think that admitting commitment must imply any departure from rationality.
nor is there any reason to think choice can't be consistently crazy as shit.
This is, however, a weak sense of rationality.
It is not any sort of rationality. Nutters have revealed preference same as anybody else
The other concept of rationality prevalent in economics identifies it with the possibility of justifying each act in terms of self-interest: when act x is chosen by person i and act y rejected, this implies that i's personal interests are expected by i to be better served by x than by y.
Economists aren't interested in justification. Lawyers might be. Where there is scarcity, in aggregate, members of a species either do things which have survival value or they go extinct.
There are, it seems to me, three distinct elements in this approach. First, it is a consequentialist view: judging acts by conseqences only.
Because that is how life works under scarcity. You may intend to eat and have a strong commitment to eating and consider eating to be a human right, but if you can't get any food you will die of starvation. This means you no longer have any preference to reveal and no action of yours can be justified save in terms of the self interest of the worms which are feeding on your flesh.
Second, it is an approach of act evaluation rather than rule evaluation.
Unless the act is in accordance with a rule. Any sequence of acts can be made to fit a rule.
And third, the only consequences considered in evaluating acts are those on one's own interests, everything else being at best an intermediate product.
Nonsense! Economics had developed a theory of externalities including the Keynesian 'paradox of thrift' long before Sen was old enough to have heard of the subject.
It is clearly possible to dispute the claims of each of these elements to being a necessary part of the conception of rationality in the dictionary sense of "the power of being able to exercise one's reason."
But only Sen has made such claims. Economics says it is rational to choose so as to minimize opportunity cost. But opportunity cost only arises under scarcity. Economics has nothing to say about people exercising their reason where there is no scarcity. Sen's time is not scarce. He is welcome to reason about the reason of reason or the reason of reason of reason so as to while away the hours or decades. After all, the Bengali Babu had a reputation to uphold as a bombastic blathershite who could achieve nothing save by the grace and favor of White peeps.
Moreover, arguments for rejecting the straightjacket of each of these three principles are not hard to find. The case for actions based on commitment can arise from the violation of any of these three principles.
No. Commitment must be linked to action or there is no fucking commitment. A self with a commitment is a self interested in fulfilling that commitment- whatever that might be.
Commitment sometimes relates to a sense of obligation going beyond the consequences.
But, if that commitment leads to no choice under scarcity then it is outside the purview of Economics. Equally, if commitment exists then an action is its consequence.
Sometimes the lack of personal gain in particular acts is accepted by considering the value of rules of behavior.
Sen is an atheist. Most people aren't. When you do something nice you get good karma or a McMansion in Paradise. Abiding by 'rules of behavior' has a reputational effect or keeps you from being cancelled on campus.
But even within a consequentialist act-evaluation framework, the exclusion of any consideration other than self-interest seems to impose a wholly arbitrary limitation on the notion of rationality.
but there is no limitation on what self interest could involve. Sen may have ploughed his best friend's wife out of altruism. Alternatively he might just have got confused and thought he himself was one of his friend's multiple identities.
Henry Sidgwick noted the arbitrary nature of the assumption of egoism: If the Utilitarian has to answer the question, "Why should I sacrifice my own happiness for the greater happiness of another?" it must surely be admissible to ask the Egoist, "Why should I sacrifice a present pleasure for one in the future?
The Egoist would agree that he shouldn't have to sacrifice anything in the present or the future. Utilitarians should just give him stuff for free and spend the rest of their time sucking off homeless dudes to general merriment.
Why should I concern myself about my own future feelings any more than about the feelings of other persons?"
Why should I wipe my own bum rather than the bum of everybody else?
It undoubtedly seems to Common Sense paradoxical to ask for a reason why one should seek one's own happiness on the whole; but I do not see how the demand can be repudiated as absurd by those who adopt views of the extreme empirical school of psychologists, although those views are commonly supposed to have a close affinity with Egoistic Hedonism.
The answer is that there is an uncorrelated asymmetry here. You will be you in the future not anybody else. Furthermore, we are able to anticipate pleasures and pains because evolution has endowed us with this facility.
Grant that the Ego is merely a system of coherent phenomena, that the permanent identical "I" is not a fact but a fiction, as Hume and his followers maintain; why, then, should one part of the series of feelings into which the Ego is resolved be concerned with another part of the same series, any more than with any other series?
Because it has survival value and, anyway, we do know what is in our interest but not what is in other people's interest. The fact is if humans keep ploughing their best friend's wife, they may not reproduce because a boy's best friend is his dog.
The view of rationality that identifies it with consequentialist act evaluation using self-interest can be questioned from any of these three angles.
This looks like a view of sentience as something which could have evolved by natural selection. It can be questioned from any angle founded upon Theism or the existence of Magic.
Admitting commitment as a part of behavior implies no denial of reasoned assessment as a basis for action.
Commitment is a word that could be used to describe behavior. We may say that a guard dog is committed to protecting property or people. Equally we may say that a guy who cheats on his wife is hella smart but is incapable of commitment.
There is not much merit in spending a lot of effort in debating the "proper" definition of rationality.
Yes there was at the time Sen wrote this. Consider adaptive expectations vs John Muth's rational expectations. If adaptive expectations are rational then there is a trade off between inflation and unemployment. If rational expectations obtain- i.e. people adopt the predictions of the correct economic theory- then Friedman would have been right. Monetary policy could get rid of inflation expectations without much impact on the real economy. Also, 'Ricardian Equivalence' would obtain.
In Development Econ, the 'rational peasant' thesis implied that much of contemporary development econ was a waste of time. In Social policy, Becker's approach would gain traction over more paternalistic or 'phenomenological' approaches. As a matter of fact 'behavioral' economics and the 'nudge' theory would have a big popular impact. Babbling about 'commitment' or 'consciousness raising' would mark the senile virtue signaling pedant.
The term is used in many different senses, and none of the criticisms of the behavioral foundations of economic theory presented here stands or falls on the definition chosen. The main issue is the acceptability of the assumption of the invariable pursuit of self-interest in each act.
As opposed to saying 'rocks are rational because instead of doing anything to save themselves from being crushed to make concrete, they commit themselves to silently supporting the cause of Palestinians protesting against the stinkiness of Gazza's football strip.
Calling that type of behavior rational, or departures from it irrational, does not change the relevance of these criticisms, though it does produce an arbitrarily narrow definition of rationality.
No. A thing may be undefined even though we all agree about things which have or lack that property.
This paper has not been concerned with the question as to whether human behavior is better described as rational or irrational. The main thesis has been the need to accommodate commitment as a part of behavior.
If x is committed to y then not-y is outside his choice menu. If we find that x has done not-y then we know his claim to be committed is false. Thus if you are unfaithful to your wife you aren't really committed to her.
Commitment does not presuppose reasoning, but it does not exclude it; in fact, insofar as consequences on others have to be more clearly understood and assessed in terms of one's values and instincts, the scope for reasoning may well expand.
Sen was married. He had a best friend who was married. Then he started 'reasoning' about 'consequences on others' and clearly understood that he needed to leave his wife and run off with the spouse of his best friend.
I have tried to analyze the structural extensions in the conception of preference made necessary by behavior based on reasoned assessment of commitment.
But every could be said to have meta-preferences even if they are wholly lacking in the ability of the willingness to commit to anything.
Preferences as rankings have to be replaced by a richer structure involving meta-rankings and related concepts.
They are useless. If you are committed to the poor, you must actually do something to help the poor. Saying 'boo to the rich! Give to the poor!' isn't 'second order good' it is just narcissistic or histrionic virtue signaling and hypocrisy. Hypocrisy may be rational, but only fools are fooled by it.
I have also argued against viewing behavior in terms of the traditional dichotomy between egoism and universalized moral systems (such as utilitarianism).
Traditional 'universalized moral systems' are religious. Sen is an atheist. He is arguing against an atheistic version of utilitarianism at odds with the tradition he invokes- Rogers, Sidgwick, Edgeworth- or the one he was born into- viz the utilitarian unitarianism of Raja Ram Mohun & the Brahmo Samaj.
Groups intermediate between oneself and all, such as class and community, provide the focus of many actions involving commitment.
Sen won't say 'family' because he'd left his family to run off with his best friend's wife.
The rejection of egoism as description of motivation
Sen wasn't egoistic in running off with the pretty, well connected, wife of his best friend because...urm... his meta preference was to be a nice guy or maybe he had multiple identities or some such thing.
does not, therefore, imply the acceptance of some universalized morality as the basis of actual behavior.
That's convenient. Abandoning your wife and kids to run off with your best friend's spouse is unversally condemned by all religions and systems of morality
Nor does it make human beings excessively noble. Nor, of course, does the use of reasoning imply remarkable wisdom. It is as true as Caesar's name was Kaiser, That no economist was ever wiser, said Robert Frost in playful praise of the contemporary economist.
The whole poem goes as follows
AN EQUALIZER
It is as true as Caesar’s name was Kaiser
That no economist was ever wiser
(Though prodigal himself and a despiser
Of capital, and calling thirst a miser),
And when we get too far apart in wealth,
‘Twas his idea that for the public health,
So that the poor won’t have to steal by stealth,
We now and then should take an equalizer.
Caesar and Kaiser are different pronunciations of the same word. Economists use axioms to get a 'Hilbert sequence' of tautologies. What they should be doing is using Gentzen type calculi featuring partial tautologies. Also, to analyze choice, they should use Brouwer type choice sequences. Sen-tentious economics is hypocritical. Midas, turning everything to gold, died of thirst. To say thirst was the miser represents what Michael Polanyi, the only Nobel prize winning scientist to also contribute to Econ, called 'moral inversion'. Sen, of course, is so inverted that he attacks Hindus as Fascists though it was from Muslims that his family had to flee. He pretends to care about the poor but was happy to preside over Nalanda University which deprived poor Bihari peasants of rich agricultural land so that money could be squandered on a white elephant project. Yet the cunt prates of 'equality'!
Perhaps a similarly dubious tribute can be paid to the economic man in our modified conception.
Or perhaps we should just admit that Sen was as shitty an economist as he was a husband to a Hindu.
If he shines at all, he shines in comparison -in contrast-with the dominant image of the rational fool.
Sen shone- if he shone at all- by reason of intellectual affirmative action. But he was no fool when it came to seeing which side his bread was buttered.
One can make a choice to commit oneself to a particular cause. But, if instead of doing what is required by that commitment, you chop logic to show you needn't do anything except talk worthless shite then, even if you are not a fool, what you are doing is making a mockery of Reason. But that's what brown monkeys in the zoos of Western ivory tower academy were rewarded for doing.
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